In recent months, almost all of the media calls have been because (gasp!) Mitt Romney engaged in sound business practices and used tax havens to boost earnings while also legally minimizing the amount of money siphoned off by the buffoons in Washington.

Most recently, I got interviewed by NBC’s big station in New York City. They inexplicably seemed to think it was a big scoop that they were able to form a company in Nevis, though at least they gave me an opportunity to explain that taxpayers benefited from tax havens and tax competition.

But I don’t want to focus on my rather generic comments. Instead, I want to address the explicit assumption in the story that it is bad for Nevis (or any other jurisdiction) to have a simple and efficient process for forming companies.

This paper reports the results of an experiment soliciting offers for these prohibited anonymous shell corporations. Our research team impersonated a variety of low- and high-risk customers, including would-be money launderers, corrupt officials, and terrorist financiers when requesting the anonymous companies. Evidence is drawn from more than 7,400 email solicitations to more than 3,700 Corporate Service Providers that make and sell shell companies in 182 countries. The experiment allows us to test whether international rules are actually effective when they mandate that those selling shell companies must collect identity documents from their customers.

And here’s what they found about so-called tax havens compared to high-tax nations. As you can see, the rules are much more likely to be obeyed in the low-tax jurisdictions that are always getting smeared.

A finding that runs directly counter to the conventional wisdom is that rich countries in the Organization of Economic Cooperation and Development (OECD) are worse at enforcing the rules on corporate transparency than are poor countries (see Figure 2). For developing countries the Dodgy Shopping Count is 12, while for developed countries it is 7.8 (and tax havens are much higher at 25.2, as discussed below). The significance of this finding is that it does not seem to be particularly expensive to enforce the rules on shell companies, given that poor nations do better than rich countries. This suggests that the relatively lackluster performance in rich countries reflects a simple unwillingness to enforce the rules, rather than any incapacity. One of the biggest surprises of the project was the relative performance of rich, developed states compared with poorer, developing countries and tax havens (see Figure 3). The overwhelming policy consensus, strongly articulated in G20 communiqués and by many NGOs, is that tax havens provide strict secrecy and lax regulation, especially when it comes to shell companies. This consensus is wrong. The Dodgy Shopping Count for tax havens is 25.2, which is in fact much higher than the score for rich, developed countries at 7.8 – meaning it is more than three times harder to obtain an untraceable shell company in tax havens than in developed countries. Some of the top-ranked countries in the world are tax havens such as Jersey, the Cayman Islands and the Bahamas, while some developed countries like the United Kingdom, Australia, Canada and the United States rank near the bottom of the list. It is easier to obtain an untraceable shell company from incorporation services (though not law firms) in the United States than in any other country save Kenya.

These are remarkable findings, but now let me take a moment to explain the correct interpretation of these results. Some people will argue that this data shows that there should be harsher rules imposed on the “onshore” company formation business.

Au contraire. The goal should be to ease the regulatory burden everywhere. Simply stated, it is foolish to fight terrorism, corruption, and money laundering with costly rules that require the monitoring of countless legal actions.

From a cost-benefit perspective, law enforcement should focus on actual criminal behavior. It wouldn’t make sense, after all, to have the government spy on everyone who buys a car merely because some people use autos when committing crime.

But that’s pretty much a good description of the mentality behind rules and regulations that target the company formation business.

The liberals are always attacking this but they take part in them many times themselves. By the way if liberals love the government so much then why don’t they just offer to give more of their money away to the government freely?

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